18 Clark: apostle of two-factor economics - Part III: nineteenth-century Americas critics

American Journal of Economics and Sociology, The,  Nov, 2003  by Kris Feder

• E-mail
• Print
• Link

There must be no restrictions in the market for land, said Clark, except the restriction that land parcels must be transferred in perpetuity. Once the state has alienated any parcel of land, it can never reestablish its original claim. It may not resume title. It may not impose a special tax on the value or rent of land, because this would be wrongfully to steal the value that it had duly transferred in good faith. If the state's good governance causes the rent of privately owned land to increase beyond early expectations, then the windfall gains it bestows upon some persons represent no injustice to others. Land titles, legitimized by the state, entitle owners to receive all future net benefits of geographically identified parcels.

Clark's discussion seems to imply that that any government action that diminishes the value of any parcel of privately owned land, without compensation, is unacceptable. Thus the state may freely engage in actions that increase the rent income of individuals, but may engage in no action that decreases or redistributes the rent income of individuals. The absolute power of the state is thus commuted to an absolute power of a subset of its citizens.

Clark does not say whether taxes that reduce the net wages of labor, the interest of capital, or the profits of enterprise represent any injustice. Presumably, they do not; the state evidently has the right to exist, so it must have the right to command resources from some source. Perhaps Clark would argue that, whereas an individual's title to land is justified by a solemn contract between the state and the landowner, no such contract underlies an individual's right to keep the earnings he individually produces by working, investing, planning, and inventing. Thus a tax on rent may represent a violation of justice while a tax on other incomes does not. Clearly, however, such a conclusion vitiates the ethical interpretation of marginal productivity from which Clark began.

In short, Clark's conception of natural justice is deficient both in its theoretical structure and in its practical consequences. Clark's divinely empowered "state" appears to be little more than a collusive association of landlords acting on their own behalf.

By contrast, George's theory of natural justice is at least complete and consistent, whether or not one accepts his ethical premise. According to George, individuals have equal rights of access to the bounty of nature. Land is understood to be the common property of all persons within the circle of exchange, including future generations.

   Well may the community leave to the individual producer all that
   prompts
   him to exertion; well may it let the laborer have the full reward of
   his
   labor, and the capitalist the full return of his capital. For the
   more that
   labor and capital produce, the greater grows the common wealth in
   which
   all may share. And in the value or rent of land is this general gain
   expressed in a definite and concrete form. Here is a fund which the
   state
   may take while leaving to labor and capital their full reward. (75)